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Accounting Frontier Series:Accounts Payable Automation
11 August 2020
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Housekeeping
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Today’s Speakers
Deloitte SAP Concur Deloitte
Anson Mak
Accounting Operations AssuranceAssociate Director
Victor Hui
Presales SolutionsManager
Christopher Brown
Asia Pacific Controllership Center of Excellence
Director
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Contents
01 Common Procure-to-Pay (P2P) Pitfalls 04 Case Study
02 Transforming P2P Process 05 How Deloitte Can Help
03 Automated Spend Management Solution 06 Q&A
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01Common P2P Pitfalls
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P2P is one of the most complex business processes, as it needs to be aligned and integrated with multiple functions (e.g. sales, operations, finance, etc.) and systems (e.g. procurement, expense, ERP, etc.). Let’s take a quick user journey to understand the common P2P pain points!
Understanding Pain Points from a User Perspective
James
Head of BU #1(Purchase marketing services)
Anthony
Accountant(Process invoices & receipts)
Mary
Financial Controller(Manage payables & payments)
Kelly
Sales Representative(Get business trip reimbursed)
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Purchase Requisition
James
Head of BU #1(Purchase marketing services)
Don’t get me started! My team should be focusing on bringing in revenue, but instead we are being distracted by the accountants: wasting tons of time on these silly paper works!
We are spending significant time on:
Wrong Codes
Constantly get asked by Finance to amend the POs due to wrong account codes
Budget Checking
No real-time visibility on the available budget, need to check with Finance every time
Lengthy Approval
Need several rounds of approval, even for small purchases, and have no idea of the stage of approval
Non-compliances
Cannot comprehend the complex policy requirements and get complaints all the time
3.1 hoursAverage time to prepare requisition
15%Purchases without PO or via unauthorized vendor
$460Average processing costs per requisition
Source: Deloitte internal data
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Expense Claim
Kelly
Sales Representative(Get business trip reimbursed)
I hate claiming expenses! It is like I have to be the accountant as well, spending so much time entering data.
We are spending significant time on:
Paper Work
Print the expense report, attach all the hardcopy receipts and send to Finance for review
Data Entry
Enter expense details into the system and allocating to cost centers
Wrong Codes
Constantly get asked by Finance to amend the expense claims due to wrong account codes
Lengthy Approval
Need to go through multiple rounds of approval, even for small claims
20 minutesAverage time to file an expense claim (another 18 minutes to fix exceptions)
19%Expense claims noted with exception (errors / non-compliances)
$52Average processing costs per expense claim
Source: Concur: Save time and money on expense report processing
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Invoicing Processing
Anthony
Accountant(Process invoices & receipts)
Despite numerous rounds of training and comments, front office consistently fails to comply with relevant policy requirements. We continue to spend extra time fixing their mistakes!
We are spending significant time on:
Matching & Review
Match invoices to PO and/or receipts and check for policy compliance and other exceptions
Data Entry
Enter invoice details into the system, allocate to cost centers and prepare journals
Exception Follow-up
Identify, investigate and resolve exceptions (errors/ non-compliances) with stakeholders
Lengthy Approval
Need to go through multiple rounds of approval and many invoices do not have PO
39 minutesAverage time to process an invoice (from data entry to approval)
23%Invoices noted with exception (errors/ non-compliances/ discrepancy)
$79Average processing costs per invoice
Source: Ardent Partners: Accounts Payable Metrics that Matter in 2020
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Payable Management
Mary
Financial Controller(Manage payables & payments)
Our P2P process is plagued with disparate systems and policies among business units. I have limited visibility on our spending and often have overdue invoices that I don’t know about.
We are spending significant time on:
Spending Analysis
Gather and manipulate data from different systems to analyze payables & spending
Reconciliation
Reconcile data from difference sources and investigate any differences
Payment Run
Identify payables that are due soon, arrange payment requests and prepare journals
Exception Follow-up
Investigate and resolve issues raised by vendors (late or contested payment, reconciliation, etc.)
15 minutesAverage time per payment run
12%Payments noted with exception (late / contested / discrepancy)
$30Average processing costs per a payment run
Source: Deloitte internal data
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Due to the cross-functional and cross-system nature of the P2P process, inefficiencies in the P2P process could have pervasive impact to your organizations:
Impacts of an Inefficient P2P Process
Lost Productivity
Manual process uses lots of staff time that could otherwise be spent on more value-add areas
Cost Inefficiency
Inefficient process results in higher costs per requisition / invoice / expense claim
Higher Risk
Inability to spot exceptions exposes you to higher risk of error/ non-compliance/ fraud and supply risks
Damaged Goodwill
Frequent delay/ dispute in payments will impact vendor relationship, limiting your chance of getting better payment terms
Limited Visibility
Disparate systems and processes limit your capability to:
• Forecast cashflow
• Manage spending
• Devise cost saving actions
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02Transforming P2P Process
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P2P Cycle
Transformation Priorities:
To successfully transform the P2P process, you need to address the common pitfalls and automate the processes as much as possible. This requires you to achieve the following strategic priorities:
Key Transformation Priorities
✔ ✔ ✔Streamline & Reduce
Manual Tasks
✔ ✔ ✔ ✔Enforce Policy & Reduce
Exceptions
✔ ✔Shorten Approval Cycle
✔ ✔ ✔Strengthen Spending
Controls & Visibility
✔ ✔ ✔ ✔ ✔ ✔Standardize & Integrate
P2P Processes
Purchase / T&E Requisition
Approval of PO / T&E Request
Approval of Invoice / Claim
Filing of Invoice / Expense Claim
Booking of Payables
Payables Management
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Streamline & Reduce Manual Tasks
Target State
• Mobile P2P process• “Straight-through” invoice processing• Minimized data entries
Examples of Initiatives:• Establish “No PO, No Pay” policy to drive higher % of pre-approved spending• Enable the P2P process to be done via mobile devices (PO, invoice scan, approval)• Reject vendor invoices with errors, incorrect information or without PO reference number• Utilize corporate purchasing card / credit card to simplify payments to vendors / employees• Establish a channel / portal that allows vendors to submit invoices electronically• Auto-capture invoice/ receipt details into the system• Connect bank feeds and auto-extract purchase / expense details from corporate cards• Automate journal entries (e.g. booking of payables and payments)• Automate the preparation of payment request files
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Enforce Policy & Reduce Exceptions
Target State
• Risk-based compliance approach• Automated matching & compliance
checks• Electronic platform to track and handle
exceptions
Examples of Initiatives:• Adopt risk-based approach and devise compliance checks based on policy requirements,
key risk indicators and common mistakes / abuses• Automate compliance checks throughout the process to prevent exceptions (e.g. missing
fields, inconsistent info., non-compliances, etc.) from happening• Automate 2 or 3 way matching to validate supplier invoices against POs and receipts to
ensure billing accuracy• Put in place appropriate e-channels and processes to track, report and handle exceptions• Follow up on and resolve unreconciled items on a timely basis• Conduct random expense audit on a periodic basis
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Shorten Approval Cycle
Target State
• Simplifed and risk-based approval• Moble-enabled approval workflow• Automated routing to appropriate
approvers
Examples of Initiatives:• Simplify approval (e.g. enable delegates, skip step if exceeding limit, 1-up, etc.)• Route to other approvers if an approver is out of office or fails to respond within a specified
timeframe• Align approval limit with assigned budget and grant bigger limit to lower approvers• Create a simpler approval chain for operating expenses• Enable the P2P process to be done via mobile devices (PO, invoice scan, approval)• Automatically determine the approvers and processors based on expense type & amount• Enable approval process to automatically skip approvers with inadequate approval limit• Enable automatic routing to alternate approvers based on policy requirements
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Strengthen Spending Controls & Visibility
Target State
• P2P Integrated with spending management
• Real-time budget checking before spend• Analytical capability over spending
Examples of Initiatives:• Integrate P2P process with working capital and spending management• Enable approvers to check requisition / claims against available budget in real time• Develop real-time analytical capability to analyze and monitor payables and spending• Maximize your savings potential by exploring the viability of any early payment discounts,
volume rebates or trade spend initiatives• Set up preferred supplier lists, negotiate better terms and sign service agreements• Develop supplier performance scorecards for strategic vendors and leverage these
scorecards to induce suppliers to improve pricing, quality and payment terms• Regularly review and update service agreement and payment terms
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Standardize & Integrate P2P Processes
Target State
• Standardized P2P processes• Integrated P2P system(s)• Centralized invoice and payable
processing• Performance driven culture
Examples of Initiatives:• Standardize P2P policy & process across entities to enable centralized management• Implement an integrated P2P system to manage procurement and invoicing processes• Centralize payable processing & reporting through a shared service environment to ensure all
business units adhere to common practices and achieve economies of scale• Establish change management program to change long-established P2P behaviors and
provide training on new workflows• Establish and monitor P2P performance metrics and investigate any deficiencies• Link performance metrics with compensation to drive continuous improvement• Enable the capability to track and analyze P2P performance metrics in real-time
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None of the transformation priorities can be made possible without various technology solutions. Instead of building your own OA app with numerous robots to connect the disparate systems, we have found an elegant solution, SAP Concur, which covers most of the technology needed in one integrated platform to automate your P2P process.
Introducing SAP Concur: An One-stop Automated Spend Management Solution
Purchase / T&E
Requisition
Approval of PO /
T&E Request
Filing of Invoice
/ Claim
Approval of
Invoice / Claim
Booking of
Payables
Payables
Management
Mobile-enabled
Workflow
Automated Invoice
/ Receipt Capture
Automated G/L
Entries
360°Spending
AnalyticsReal-time Budget
Checking
Automated Matching
& Compliance Check
High-level Workflow & Features of SAP Concur:
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03Automated Spend Management Solution
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04Case Study
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Case Study: Asia Pacific Retailer
Client Profile:• Retailer
• 3,500+ Employees
• Businesses across APAC
Situation:
Due to legacy issues, an APAC Retailer is plagued with a number of P2P issues that expose them to inefficiency and higher risk of errors and employee abuses:
Inadequate Spending Controls
There is no central policy to govern spending, and all staff can spend on behalf of the company (via cash, corporate card, PO or invoice)
Highly Manual Process
Staff spends lots of time entering data into the system, filing expense report, performing reconciliations and calculating accruals
Lack of Visibility over Payables
Disparate systems limit Finance’s visibility over payables and there are often overdue invoices that Finance do not know about
Solution:
To address the P2P issues, we have assisted the APAC Retailer to:
Develop a robust P2P policy to standardize
practices and govern spending01
Implement SAP Concur to manage and automate
the entire P2P process and drive compliance02
Establish a roll-out plan, provide training and
support change management to drive adoption03
Results:
We have successfully implemented SAP Concur for the APAC Retailer and below are highlights of the project results:
80% reduction in time spent on month-end payables & expense process via automation
HK$1.1M of duplicated spending prevented
Cost saving potential identified (by centralizing spend on certain vendors)
Gained real-time visibility over purchase commitment, liabilities and spending
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05How Deloitte Can Help
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Our End-to-end Support on Your P2P JourneyFrom our experiences with 115+ Concur customers, we have developed a tried and tested approach to help you accelerate benefit realization and ensure a successful implementation. To help you through your Concur journey, we can assist you on:
Use Case Identification
Help you to assess the current state of your procure-to-pay process, identify use cases for Concur and formulate a deployment plan
Policy & Process Development
Assist you to develop policy and future workflow to ensure consistent usage of Concur (e.g. expense policy, approval workflow, audit rules etc.)
System Design & Configuration
Support you to establish a design blueprint and configure Concur accordingly, aligning with the policy requirements
Roll-out Support
Support you in user testing, setup of roll-out plan to improve adoption, training on future Concur workflow, and providing go-live support
How We Can Help Why Deloitte?
• Rich implementation experiences (Supported 115+ Concur customers, more Concur experiences than any other service providers in APAC)
• Strong relationship & collaboration with Concur (3+ Years of Alliance with Concur and Enterprise Services Partner of the Year 2019 with 40+ certified consultants)
• Codified, repeatable approach to deploy Concur (Established standard approach & toolkits to ensure rapid delivery, optimize processes and improve user adoption)
• Accountants with technology capability (Not only we understand accounting, but are capable in using technologies (besides Concur) to solve your issue)
• Virtual office of finance (Capability to set up a truly automated finance operations)
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• Do you supplement optimal character recognition (OCR) with human validation?
• Do you have an ecosystem that offers me choices for payment providers?
• If an invoice is outstanding, how does your solution help me easily see and show where it is in the process?
• How long will it take to implement the solution and get users fully onboard?
• What other systems do you integrate with?
• If you are planning to use robotics process automation (RPA) to automate some parts of the P2P process or help with integrating the different systems , how many robots do you intend to put in place? Does your organization have in-house capability to maintain these robots?
• Do you have a mobile app that allows you to approve invoices on the go?
• Will I have control of and access to my invoices at all times?
• How will I get my AP data into my ERP or financial system?
If your organization is planning to automate the P2P process, a key part is to choose the right automation solution. Below are some of the key questions that will help you evaluate what is best for your organization.
Key Questions to Consider
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Deloitte is at the forefront of defining, researching and transforming the accounting function today. If you’re ready to move from abstraction to action:
Let’s talk Christopher BrownDirectorEmail: [email protected]: +61 7 3308 7255
Anson MakAssociate DirectorEmail: [email protected]: +852 2852 6738
Ted HoPartnerEmail: [email protected]: +852 2852 6489
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06Q&A
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